Some Democrats Look to Push Party Away From Center

WASHINGTON — As President Obama made the case on Wednesday about how the American economy was improving, he went off script to underscore how significant the challenges were that remained.

“But — and here’s the big but — I’m here today to tell you that we’re not there yet,” Mr. Obama said, expanding on his prepared text to note that the wealthy are doing better while the middle class is struggling and others are faring worse.

He did not need to remind many of his fellow Democrats.

With Mr. Obama experiencing a difficult first year of his second term and his lame-duck status growing ever nearer, his speech underscored the stirrings of a debate inside the Democratic Party about the party’s economic approach, given the halting recovery.

If positions on foreign policy and specifically the Iraq war marked the dividing line in the Democrats’ last fierce internal debate, issues related to banks, entitlements and the rights of consumers broadly could shape the party’s next search for an identity.

Liberals, pointing to a bankrupt Detroit and new reports of diminished class mobility, believe the plight of lower-income and young Americans is so severe that the party must shift away from the center-left consensus that has shaped its fiscal politics since Bill Clinton’s 1992 election and push more aggressively to reduce income disparity.

“The sooner we get back to a good, progressive, populist message, the better off we’re going to be as Democrats,” said Senator Tom Harkin of Iowa.

The growing intraparty economic debate comes even as there is increasing cohesion on the cultural issues that once divided Democrats. Many in the party see progress on matters like gay rights, gun control and immigration, topics that Mr. Obama has spent time on this year but mentioned only glancingly in his address Wednesday at Knox College, in Galesburg, Ill.

The votes and stances on these issues among Democrats in Congress are now far more uniform than they were as late as the 1990s. And it is unthinkable that — whether their 2016 standard-bearer is Hillary Rodham Clinton or somebody else — every major contender in the next Democratic primary season will not be down-the-line progressive on cultural issues.

But there is a growing frustration among progressives who are now saying the party must move toward a more populist position on the issue that many on the left see as the great unfinished business of the Obama years: economic fairness.

“Look at where we are going to be at the end of the Obama administration — we’ll see a lot of change on social issues, but on the ground in the country we’ll still have this growing economic inequality,” said Neera Tanden, president of the liberal Center for American Progress.

Dating to his first appointments as president-elect, Mr. Obama has drawn suspicion from some elements of the left on economics. Now, with the first talk of the post-Obama Democratic Party, liberal angst is starting to take form in Washington.

Senator Elizabeth Warren, the former Harvard law professor who is suddenly Massachusetts’s senior senator as a freshman, has been at the center of two issues that will be sharply debated within the Democratic Party heading into 2016. Ms. Warren is drawing attention to the college students and recent graduates besieged by debt by proposing to offer them the same interest rate for a year, 0.75 percent, as the Federal Reserve offers banks.

Photo

Senator Elizabeth Warren of Massachusetts is challenging the Democratic centrist consensus on finance and other issues.Credit
Drew Angerer/Getty Images

When a bipartisan compromise was struck last week on federal student loans, she declined to support the deal — irritating some of her more senior Democratic colleagues.

“The student loan issue for the millennial generation will rank up there with the draft for our generation,” said Robert L. Borosage, a co-director of the liberal Campaign for America’s Future.

Ms. Warren is also challenging the centrist consensus on high finance and has sought to revive a dormant conversation about whether investment and commercial banking should be intermingled by introducing a bill to restore Glass-Steagall, an issue few senior Democrats on either end of Pennsylvania Avenue want to revisit.

An error has occurred. Please try again later.

You are already subscribed to this email.

Center-versus-left tensions have come into view in just the last few days amid speculation that Lawrence H. Summers, the center-left former Harvard president and senior economic official in the Clinton and Obama White House, is a serious candidate to become chairman of the Federal Reserve.

And while the issue has largely been dormant since Mr. Obama’s budget proposal earlier this year, he signaled in his Wednesday speech that he would again try to push through changes to Social Security and Medicare, programs the left considers sacrosanct.

“We’ve got to embrace changes to cherished priorities so that they work better in this new age,” Mr. Obama said of his party. “We can’t just — Democrats can’t just stand pat and just defend whatever government is doing.”

Matt Bennett, a co-founder of the moderate Third Way, said such a statement would shape the coming Democratic conversation.

“There will be a debate about where our priorities should be,” said Mr. Bennett, who added that the left was “starting to rev up their engines” for the debate. “On the center-left, the argument we’re making is that you can’t have robust investment spending on things like education and roads and have unfettered, skyrocketing growth in entitlement programs.”

But the scale and the persistence of the country’s economic difficulties may cool Democratic ardor for addressing deficits.

Some in the party took note when Mrs. Clinton used her first major speech since departing as secretary of state to point to the desperate straits of many people and localities in the Obama era.

“In too many places in our own country, community institutions are crumbling, social and public health indicators are cratering, and jobs are coming apart and communities face the consequences,” Mrs. Clinton said in a speech last month at the Clinton Global Initiative conference in Chicago.

Too much should not be read into one part of one speech. And Mrs. Clinton’s sheer force of personality could overshadow any internecine policy debates.

But past arguments by Mr. Clinton and other moderate Democrats that positioning the Democratic Party in the political center was the only way to win elections could be harder to make at a moment when the economy is still wheezing, powerful strains of populism have emerged in both parties, and the Republicans are fighting their own civil wars and face serious demographic challenges.

A version of this news analysis appears in print on July 25, 2013, on Page A1 of the New York edition with the headline: Party in Flux On Economy. Order Reprints|Today's Paper|Subscribe